What is Azure cost optimization?
Azure cost optimization means continuously aligning cloud spend with business priorities – maximizing value, minimizing waste, and maintaining security and performance.
Optimizing your Azure costs means managing your Azure cloud resources to lower your overall spend. In other words, how can teams continuously improve how they provision these resources to best control the related cost?
It’s all about making sure you’re getting the best deal on the resources you need—and avoiding having to pay for those you don’t.
To get the most out of your cloud spend, you need to strike a perfect balance between well-planned architecture, automation, and cost visibility.
This guide will spill all the secrets behind the art of Azure cost optimization.
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Why Azure cost optimization is critical
Clouds such as Azure promise unmatched flexibility, allowing you to scale with ease. But if you’re not careful, costs can quickly get out of control.
Across large organizations, bills for idle virtual machines, wasted gigabytes of storage, overprovisioned yet unused Kubernetes cluster nodes, and overscaled database servers quickly accumulate.
Letting such inefficiencies fester can result in:
Unexpected bills for cloud waste. Simply forgetting to shut down a service can severely affect your next bill, with some instances costing up to $170/hr.
Poor resource efficiency. When you waste resources, you lose opportunities; e.g., with the funds lost to cloud waste above, you could have upgraded or upscaled resources you actually use.
Wasted opportunities, lost customer interest. As the cost of infrastructure has to be carefully factored into business proposals, you’re losing an inch of competitive edge with every bit of overspend.
Accountability for cost efficiency could be evenly distributed across the organization, as it’s a cross-functional concern. But the truth is that cost optimizations are most impactful when owned—and accounted for—by platform and engineering teams.
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Foundational principles of Azure cost optimization
Before the ultimate reveal, we need to explain some “golden rules” your infrastructure needs to follow to drive cost optimization:
Rightsize compute and storage: The whole point of cloud is flexibility—getting resources when you need them and matching the capacity of your compute resources to the actual demand of your projects. Avoid overstocking; keep some headroom, of course, but don’t overdo it.
Embed a FinOps culture: Align engineering, finance, and security teams around cost visibility, shared accountability, and continuous optimization through cultural and governance practices.
Eliminate unused or idle resources: If it’s not doing anything, it’s not bringing you any benefit, so why pay for it? Deallocate resources that are idle. It’s much cheaper to restore them a few minutes before your business hours start than to let them eat away at your budget overnight.
Use flexible pricing options: If you know what you need, make sure you get it at the best price. Reserved instances, saving plans, and spot instances are a great way to turn a well-thought-out architecture into huge discounts.
Apply tagging and resource organization: Even otherwise optimized resources aren’t exactly cost-efficient if they’re idling somewhere, lost in the sea of compute provisioned for a purpose long forgotten. Maintain order and clarity with strategic tagging.
Tie costs to architecture and team ownership: Optimize with context by promoting transparency and accountability. Understanding the nature of costs and taking responsibility for them will help improve your bottom line.
Automate optimization: There are too many rules for a human to remember, let alone stick to. Automating the continuous detection and remediation of inefficiencies will be much less hassle and much more time for more productive tasks.
Service-specific Azure optimization techniques
Time to discuss the best techniques to achieve the best cloud cost savings on Azure. For your convenience, we’ve categorized them by the services they apply to. Unfortunately, some practices are mutually exclusive or provide diminishing returns, so you’ll have to find a mix that works best for your specific case.
Azure virtual machines (VMs)
Deallocate idle VMs
Deallocating virtual machines dedicated to development environments, CI/CD workflows, and other tasks that are inactive outside of business hours can yield incredible savings. By simply scheduling start-ups and shut-downs, you can save up to 50%-70% of the base monthly VM cost.
Use Azure reserved instances or savings plans
Committing to specific virtual machine capacity for either a year or three years pays well. Microsoft offers up to a 72% discount for purchasing an instance reservation, while savings plans provide up to a 65% discount. Savings plans also apply to a broader range of services, plus you get greater flexibility based on general hourly spending on all applicable offerings.
Leverage spot instances
Spot instances are the spare capacity required for Azure to maintain service availability and reliability. They’re available to rent, under one condition: they’ll be reclaimed if needed, and on short notice (30-second minimum). In exchange, you get a discount of up to 90% on pay-as-you-go rates—perfect for the cost-effective deployment of interruptible workloads.
Take advantage of regional pricing differences
Due to logistics, availability of engineers, trade agreements, and multiple other reasons, VMs in many Azure regions are priced differently. If cross-regional latency doesn’t concern you, carefully choose the location for your next machine to get the same resources up to 260% (yes, that’s correct) cheaper!
Azure Kubernetes Service (AKS)
Right-size your cluster
AKS can make use of the native cluster autoscaler in combination with Azure virtual machine scale sets to dynamically adjust to the needs of your workflows. This is a great way to keep your cluster permanently right-sized—assuming you’ve got the cluster-level configuration right, of course!
Consider spot instance node pools
Spot instances can serve as a cheap way to provide your cluster with a burst of capacity for bulk, interruptible workloads. You can’t run the entire cluster on Spot VMs, but the right balance between on-demand and spot instances can slash the cost of your AKS by 15%-30%. At scale, this is a hefty discount.
Take advantage of saving plans
Since, under the hood, AKS relies on regular Azure compute resources, savings plans also apply. This means you can estimate the hourly cost of your cluster and save a lot by committing to your estimation.
Azure Blob Storage
Use appropriate storage access tiers
Azure Blob Storage pricing doesn’t solely depend on the amount of data you’d like to store. The most frequently used hot access tier is great for files you’d like to operate on frequently, but don’t forget, other tiers are available, too.
To cut a significant portion of your blob spend, send bigger, infrequently accessed files to cool or cold tiers, and delegate any long-term storage to the archive tier.
Define blob lifecycle policies
Implement a lifecycle management policy to automatically purge files you no longer need. It can also automatically move data between access tiers, pushing blobs to cool down if they haven’t been accessed for some time or pulling them back when they are.
Plan for reserved capacity
As with many other resource types, you can reserve blob space, too. Although demand for storage can be pretty volatile, with proper orchestration and lifecycle management, you can easily take advantage of this commitment.
Azure Functions/App Services
Carefully select your service type
Azure App Service is, in a nutshell, a managed web hosting service, while Functions are short-execution, event-driven serverless workload handlers. Confusing the two might be a very costly mistake due to the differences in their pricing models.
Remember to evaluate whether your workloads are constant and persistent, or stateless and quick, then choose the corresponding service.
Use proper runtime environments
Linux-based App Service is much, much cheaper than the Windows-based option for the same capacity. If you’re not in crucial need of deep integrations between the underlying runtime and your application, this is a worthy alternative.
Manage incoming traffic
Web application firewalls, or any kind of caching at the edge, provided by Azure Front Door/WAF can help you decrease your capacity requirements. Stop wasting resources on responding to every unnecessary or malicious request and bothering your origin instead of serving visitors cached content.
Following this pattern, you’ll be able to stay within the bounds of your current, cheaper pricing tier for a lot longer.
Azure SQL and other databases
Select the correct pricing model
Azure databases come in two models: vCore and serverless compute. Autoscaling based on demand sounds enticing, but in reality, it might turn out even more expensive than vCore.
Consider serverless if your database is expected to have long inactive periods, but if it’s running constantly, with little to no inactivity, the vCore billing model is the way to go.
Use elastic pools for databases with flexible demand
Elastic pools allow you to share resources between a group of databases, instead of dedicating them to each one separately. If you’re managing a lot of databases whose demand for compute capacity varies wildly, combining them into a resource pool can provide a significant cost benefit—without sacrificing performance or reliability.
Apply savings plans
Databases are one of the most ludicrously priced resources of the entire service palette of Azure, so in this case, savings plans are pretty much a must. Try to preemptively estimate your database demand, and purchase an appropriate savings plan to make their pay-as-you-go cost a bit more palatable.
Tools for Azure cost optimization
Like most external vendors, Azure provides a dedicated suite of tools for cloud cost management and optimization.
Native Azure security tools
Azure Cost Management + Billing: Handles all the basic functionalities you’d expect, e.g., budgets, usage reports, forecasts
Azure Advisor: Provides performance, security, and cost recommendations
Azure Pricing Calculator: Allows you to estimate and model costs before provisioning resources; one of the most useful tools for planning finely tuned architecture
Azure Reservations/Spot VMs: Offers platform-native discounts, in return for up-front commitment or workload interruptibility—big stakes, big gains
Third-party and engineering-focused platforms
Lots of third-party tools are dedicated to helping you optimize your Azure costs. For example, software like Infracost can help anticipate the cost of operating your infrastructure provisioned with IaC. Meanwhile, portals like CloudPrice track regional pricing differences, letting you choose the best location for your new compute.
You’ll get the best bang for your buck from tools that:
Tie cost insights to ownership and architecture
Integrate with existing engineering workflows
Provide real-time or near-real-time visibility
Look for tools that combine security, risk, and cost data so that engineers can act with confidence. Lack of context spurs blind action, and blind action… never ends well.
Cost monitoring & anomaly detection tools
Taking action is much more difficult to justify if you can’t properly track whether your action succeeds or fails. Both native and external solutions for this exist.
Azure Cost Management can be configured to monitor costs and detect anomalous spikes effectively, but for more complex use cases, like multi-cloud infra across a company, third-party services will excel.
Regardless of which you choose, make sure to include at least some capabilities in your architecture to proactively adjust future optimizations; these will depend on the real-time behavior of infrastructure under your command.
Azure cost optimization with security context: The Wiz advantage
As we've emphasized throughout this guide, effective Azure cost optimization requires context—understanding not just what costs money, but why, who owns it, and how it connects to your broader cloud architecture and security posture.
This is where Wiz transforms Azure cost optimization from guesswork into strategic decision-making. Wiz provides the missing context layer that makes cost optimization both safer and more effective:
Correlate costs with security risks: Identify whether high-cost resources are business-critical or simply misconfigured and over-permissioned.
Surface ownership and architecture relationships: See exactly how Azure resources connect to each other and which teams own them, enabling informed decisions about rightsizing, decommissioning, or optimizing without breaking dependencies.
Detect optimization opportunities with security benefits: Find idle virtual machines that are both wasting money and expanding your attack surface, or identify over-permissioned storage accounts that could be rightsized while improving security posture.
Prevent costly security incidents: Misconfigured Azure resources don't just waste money—they create security vulnerabilities that can lead to breaches costing far more than the original infrastructure spend. Wiz helps you optimize costs while strengthening security.
Ready to optimize your Azure costs with full security and architectural context? Schedule a demo to see how Wiz turns complex Azure environments into clear, actionable optimization opportunities.
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